Mortgage Banker March 2023

MortgageBanker MAGAZINE

KEEPING CASH SAFE

Homeowners would rather borrow than withdraw

A FOCUS ON FAIR

See how GSEs are moving beyond affordable housing

AND THE LOSER IS … Employee competitions can have lasting effects on non-winners

Do the RIGHT THING Diversity could mean HIGHER PROFITS

REGULATORY CORNER

FHFA ANNOUNCES UPDATES TO ENTERPRISES’ SINGLE-FAMILY PRICING FRAMEWORK

The Federal Housing Finance Agency (FHFA) announced further changes to Fannie Mae’s and Freddie Mac’s (the Enterprises) single-family pricing framework by introducing redesigned and recalibrated upfront fee matrices for purchase, rate-term refinance, and cash-out refinance loans.

“These changes to upfront fees will strengthen the safety and soundness of the Enterprises by enhancing their ability to improve their capital position over time,” said Director Sandra L. Thompson. “By locking in the upfront fee eliminations announced last October, FHFA is taking another step to ensure that the Enterprises advance their mission of facilitating equitable and sustainable access to homeownership.”

The priorities outlined in the 2022 and 2023 Scorecards for the Enterprises include developing a pricing framework to maintain support for single-family purchase borrowers limited by wealth or income, while also ensuring a level playing field for large and small sellers, fostering capital accumulation, and achieving commercially viable returns on capital.

The pricing changes broadly impact purchase and rate-term refinance loans and build on upfront fee changes announced by FHFA in January and October 2022, which have been integrated into the new grids. The new fee matrices consist of three base grids by loan purpose for purchase, rate-term refinance, and cash-out refinance loans — recalibrated to new credit score and loan-tovalue ratio categories — along with associated loan attributes for each.

The updated fees will take effect for deliveries and acquisitions beginning May 1, 2023, to minimize the potential for market or pipeline disruption.

FREDDIE MAC BRINGS GREATER DIVERSITY AND EQUITY TO ITS CREDIT RISK TRANSFER PROGRAMS

Freddie Mac announced that its Single-Family and Multifamily Credit Risk Transfer (CRT) programs acquired credit protection of approximately $833 million on more than $50 billion unpaid principal balance (UPB) of mortgage loans, brokered by Aon plc, a leading global professional services firm, and sub-brokered by certified minority-business enterprise (MBE) Protecdiv in 2022.

“Freddie Mac is committed to the inclusion of qualified, diverse-owned businesses in the sourcing of financial services,” said Mike Reynolds, Freddie Mac vice president of CRT.

“We actively seek out third party-certified and self-certified minority businesses capable of meeting our demanding requirements as part of our overall effort to bring greater equity to the housing finance industry,” added Freddie Mac’s Jeff Shue, senior director of Single-Family CRT.

Freddie Mac’s Single-Family CRT ACIS (Agency Credit Insurance Structure) program closed three (re)insurance transactions in 2022 placed by Aon as broker and Protecdiv as sub-broker. These included ACIS 2022-SPH3, which closed in November 2022, and ACIS 2022-SPL6 and ACIS 2022-SPL7, which closed in December 2022. Together the transactions totaled $634 million of credit protection on $44.6 billion UPB of loans.

“Protecdiv is a certified MBE brokerage firm that focuses exclusively on large, enterprise-scale risks. We hope their participation in our transactions will help draw more minority-led firms into this space. Freddie Mac is committed to supporting equity throughout the housing industry,” said Freddie Mac’s Robert Koontz, senior vice president for Multifamily Capital Markets.

In November 2022, Freddie Mac completed a Multifamily Credit Insurance Pool (MCIP) insurancebased credit risk sharing transaction, MCIP 2022-R5, with coverage of $198.9 million on a reference pool of $5.5 billion UPB, with Aon as broker and Protecdiv as a sub-broker.

Joe Monaghan, Global Growth Leader for Aon’s Reinsurance Solutions and CEO of Aon’s Public Sector Partnership, said, “Aon has proudly served Freddie Mac for nearly a decade, brokering their ground-breaking mortgage reinsurance programs. We are thrilled to collaborate with Protecdiv as we continue to deliver on Freddie Mac’s and Aon’s shared commitment to greater inclusion and diversity, innovation, and impact.”

STAFF

Vincent M. Valvo

CEO, PUBLISHER, EDITOR-IN-CHIEF

Beverly Bolnick ASSOCIATE PUBLISHER

Christine Stuart EDITORIAL DIRECTOR

David Krechevsky

EDITOR

Keith Griffin

SENIOR EDITOR

Mike Savino

HEAD OF MULTIMEDIA

Katie Jensen, Steven Goode, Sarah Wolak STAFF WRITERS

Rob Chrisman, Nir Bashan CONTRIBUTING WRITERS

Gary Rogo

SPECIAL SECTIONS EDITOR

Alison Valvo

DIRECTOR OF STRATEGIC GROWTH

Steven Winokur CHIEF MARKETING OFFICER

Julie Carmichael PROJECT MANAGER

Meghan Hogan DESIGN MANAGER

Christopher Wallace, Stacy Murray GRAPHIC DESIGN MANAGERS

Navindra Persaud

DIRECTOR OF EVENTS

William Valvo

UX DESIGN DIRECTOR

Andrew Berman

HEAD OF CUSTOMER OUTREACH AND ENGAGEMENT

Tigi Kuttamperoor, Matthew Mullins, Angelo Scalise MULTIMEDIA SPECIALISTS

Melissa Pianin

MARKETING & EVENTS ASSOCIATE

Kristie Woods-Lindig ONLINE ENGAGEMENT SPECIALIST

Nicole Coughlin, Nichole Cakirca ADVERTISING ASSOCIATES

Lydia Griffin MARKETING INTERN

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The Value Of A Lender

WHAT TO KNOW BEFORE PUTTING YOUR BUSINESS UP FOR SALE

By ROB CHRISMAN, CONTRIBUTOR, MORTGAGE BANKER MAGAZINE

Some residential lenders believe that servicing, and the mortgage servicing rights that accompany it, is the only thing of value for lenders. After all, it is an annuity that earns a return every month or can be sold. But that begs the questions, is it only the lenders who have servicing who have any value? Can small lenders with decent market share have interest from buyers? And what attributes are examined when a potential buyer and seller of a lender are negotiating?

The actual valuation analysis of a lender, or vendor, can be compared to that of appraising a house. The “Market Approach” is based on market multiples derived from publicly traded companies or actual sales of comparable companies or assets. The “Cost Approach” is based on the value of the underlying assets and liabilities of a business to estimate the equity value of the firm. (This approach, however, is not applicable to a mortgage production company without significant servicing assets). The “Income Approach” is based on the premise that the value of a business depends on its future earnings, discounted at a reasonable discount rate, that is commensurate with the time value of money and the inherent risk of the investment.

In valuing a company, a potential buyer will look at the audited net worth and the

discounted cash flows, usually for the next three years of estimated earnings. (The devil’s in the details and assumptions!) The value to a potential buyer will depend on different factors, and three main variables often used in an analysis: loan volumes, margins, cost structure, and profitability, and the current policies, procedures, & business model. Of course, repurchase obligations are included, as well as existing or potential liabilities. Are there outstanding lawsuits? Is the buyer buying the entire company, or a percentage of ownership? It is not a simple process, and making assumptions about the future is problematic. A thorough examination of these factors is where the value of a competent advisor shows itself.

ESTIMATES & ASSUMPTIONS

The final price, while always negotiable, is often a combination of net worth as of a certain date and the discounted cash flows for the next three years of earnings. Valuations tend to be highly dependent on estimates and assumptions as opposed to historical numbers since the residential mortgage industry is extraordinarily cyclical with a high degree of earnings volatility. The company’s markets, products and services, historical financial results, economics and industry outlook and prospects for the future factor into the pricing.

Available documentation relating to the company and its income statements, scorecard and dashboard metrics, and cash flow also are used, as are volume forecasts from the Mortgage Bankers Association. It is important to have a knowledge of recent transactions involving the mergers or acquisitions of mortgage banking companies. The fair market value to a potential buyer will depend on loan volumes, margins, cost structure, and profitability, and the current policies, procedures, and business model. The typical buyer will want 100 percent ownership, or at least 51 percent, as the minority ownership is viewed as having little value.

Valuation is focused on a company’s purchase business share, but not just for the last six months. A consistently above-average purchase share demonstrates management’s commitment to building and maintaining referral sources over several years. There is a sense that where this is the case, a lender’s sales force will not revert to refinance volume when there is a mini-interest rate rally. A strong purchase business culture eliminates some volatility in the inherently cyclical mortgage business.

Product mix matters. A prospective seller’s government lending share (inclusive of FHA, VA, and USDA loans) is important as it is generally assumed that government originations generate higher revenues and margins than agency conventional loans. But jumbo loans, as most are brokered out, can generate significantly lower revenues and are a drag on earnings. Therefore, a significantly above-average jumbo share is generally a negative.

MANAGEMENT & INTANGIBLES

Management’s ability to earn respect and appreciation from counterparties, regulators, borrowers and even competitors provide great comfort to a prospective buyer but are viewed as intangibles. Investor “Report Cards” are one source of objective reputation assessment, as is systematic measurement of

ROB CHRISMAN

THE COMPANY’S MARKETS, PRODUCTS AND SERVICES, HISTORICAL FINANCIAL RESULTS, ECONOMICS AND INDUSTRY OUTLOOK AND PROSPECTS FOR THE FUTURE FACTOR INTO THE PRICING.

borrower satisfaction.

So, what improves the value of a lender or vendor? It helps if an ongoing concern, already in the business of residential lending, has experience originating home loans in the current compliant-heavy environment, and has a good existing reputation among investors and vendors as indicated by its investor scorecards. (Many argue that in today’s difficult environment, few people would opt to start a mortgage company. Therefore, there is a slight premium placed on an ongoing operation.) Owning servicing, and therefore the mortgage servicing rights, increases value.

Factors that detract from value include minority ownership, repurchase risk due to guideline violations, undisclosed liabilities, appraisals, misstated income and occupancy issues, heavy dependence on refinance activity, compliance risk, a reliance on a narrow set of products, a high cost of funds, and a narrow geographic lending area.

On an industry-wide scale, lenders and vendors generally rise and fall in value as a group. As one can see, determining the value of a residential lender or vendor is much more complex than taking last year’s earnings and multiplying it by three. Therefore, it is important to have an experienced and knowledgeable advisor, accounting and legal assistance, as well as a good dose of common sense involved in any deal.

DETERMINING THE VALUE OF A RESIDENTIAL LENDER OR VENDOR IS MUCH MORE COMPLEX THAN TAKING LAST YEAR’S EARNINGS AND MULTIPLYING IT BY THREE.

GSEs Now Champion Fair And Equitable Housing

FHFA PROVIDED FRAMEWORK FOR PROJECTS WITH GREEN IMPROVEMENTS TO SATISFY MISSION-DRIVEN CRITERIA

By GEORGIA INSTITUTE OF TECHNOLOGY, SPECIAL TO MORTGAGE BANKER MAGAZINE

Mortgage Banker Magazine interviewed Evan E. Blau, a partner of Manhattan-based Cassin & Cassin, and chair of the firm’s Agency Lending and Affordable Housing practice on the topic of Federal Housing Finance Agency’s recently release of the 2023 Scorecard for Fannie Mae, Freddie Mac, and their joint venture, Common Securitization Solutions.

Blau focuses on representing lenders in the financing of multifamily properties through the Fannie Mae Delegated Underwriting & Servicing program and the Freddie Mac Seller-Servicer program, with an emphasis on affordable housing, credit enhanced tax-exempt bond structures, green financing, moderate rehabilitation, student housing, manufactured housing, and conventional loan programs.

Q. The Federal Housing Finance Agency recently released the 2023 Scorecard for Fannie Mae, Freddie Mac, and their joint venture, Common Securitization Solutions. What are some of the highlights of the scorecard?

FHFA, Fannie Mae, and Freddie Mac have championed their missions of promoting affordable housing in general. I think one of the newer highlights is that we are starting to see a focus on not only affordable housing, but housing in general that is fair and equitable. I applaud them for their focus on promoting a healthy equitable housing market to all.

Q. The 2023 scorecard outlined two equally weighted objectives: promoting sustainable and equitable access to affordable housing and operating the agency lending business in a safe and sound manner. How is the former accomplished? With regards to the latter, are there concerns about operating the GSEs in “a safe and sound manner?” If so, what are the concerns?

Fannie Mae and Freddie Mac have promoted green efficiency products that many of their borrowers have utilized in the financing of green improvements at their projects. This year in releasing the multifamily loan volume, FHFA provided framework for projects with green improvements to satisfy their missiondriven criteria. In terms of equitable housing, both Fannie Mae and Freddie Mac enacted Equitable Housing Finance Plans, and I think implementing those will help to further achieve those goals. In terms of operating the GSEs in a safe and secure manner, the only concern I think I would have is overall health of the US economy. Capital markets transactions have somewhat stalled due to rising rates and inflation. I think Fannie Mae and Freddie Mac have operated tremendously in difficult markets in the past and will continue to do so in the future.

Q. What implications does the FHFA’s scorecard carry for the agency lending and affordable housing sectors as we head in 2023? While the GSEs have always been missiondriven institutions, I do think over the last 5-10 years they have become more mission critical. As we have seen with their affordable housing goals over time, the GSEs have increased their focus on more affordable housing and missiondriven transactions. I think they will continue with this arc and growth in the future. Who knows, we could see a time where 75-80% of their loans are mission based.

Q. What insight can you provide into what the GSE’s implementation of these objectives might look like and how the FHFA may coordinate enforcement efforts for the criteria?

I think the GSEs have always been creative in their creation and implementation of new lending products to satisfy the market, but also serve their affordable housing goals. A great example of this is the Fannie Mae MTEB

and Freddie Mac TEL products. This creative ingenuity will help them develop and foster future loan products, while strengthening existing ones, in the future. I would look at FHFAs role as an enforcer, but more of a collaborator in their oversight of this process.

Q. The FHFA also wants the GSEs to continue research to identify at-risk borrowers, properties, and communities to inform policy and improve climate-resiliency efforts. Is this an insurance issue? An issue dealing with building codes? What role can the GSEs play? That is a good question. I would expect this could be insurance, but also we have seen climate events over the last decade or so that have had a profound effect on communities. From Superstorm Sandy to flooding in Houston, climate events never that possible are occurring with greater frequency. Perhaps the GSEs can better inform these Borrowers and communities of this new norm.

AS WE HAVE SEEN WITH THEIR AFFORDABLE HOUSING GOALS OVER TIME, THE GSES HAVE INCREASED THEIR FOCUS ON MORE AFFORDABLE HOUSING AND MISSION-DRIVEN TRANSACTIONS.

Rejection Training

THREE STEPS TO MAKE REJECTION A POSITIVE INFLUENCE IN BUSINESS

By NIR BASHAN, CONTRIBUTOR, MORTGAGE BANKER MAGAZINE

We spend a lifetime running away from rejection. Yet it is all around us – everywhere we look. In each signpost and milestone of life. It is there. It is at the workplace, in our personal lives and even in the sports we watch. Rejection is part and parcel to the human experience, yet most people deal with it by trying at all costs to avoid it altogether.

We don’t teach people how to deal with rejection in schools, we don’t teach people how to deal with rejection at work or in the military or anywhere else, so is it any wonder that folks hate rejection, and we therefore avoid it in all we do?

It seems to me that we need a bit of rejection training in order to be more creative and innovative at work. And that training will allow us to not only deal with rejection in a better way, but it will also allow us to thrive. Here are three things we can do right away to help start the training and turn rejection into prospects:

1. TURN REJECTION INTO OPPORTUNITY

All rejection comes down to is fear. We are so afraid of rejection because it means that our product or service is deemed not good enough. Not up to par and not desirable. We then take this rejection and apply it personally – one of the biggest mistakes I see in most business today. Especially with sales teams but not only there. I have seen it in HR departments, too, when there is an inability to recruit that perfect candidate. No matter where it appears, this fear of the unknown can be crippling.

But if we simply reframe the problem, then we are using creativity and innovation to help us once and for all be rid of the fear of rejection and turn it into opportunity. Instead of framing our misfortune by looking at the candidate that got away who would have been a perfect hire, lets instead reframe the misfortune into an opportunity. What other candidates were out there that may have been a better fit? Do we really know if that was the perfect candidate?

I have hired over a thousand people before – and I promise you it is no science. What seems perfect on paper is sometimes not perfect in reality.

By simply reframing the problem and looking instead at opportunities, we are far more able to deal with the rejection –whatever it may be – and look instead at the positives that it creates even if they are not readily or immediately recognizable.

2. MAKE IT PART OF THE ROUTINE

Shit happens. It really does. I am in no way telling you that rejection will never occur to you ever again if you embrace these creativity and innovation tools. But I have noticed that some of the most powerful companies and superstars in various careers have made rejection a part of their daily routine. So much so that nothing sticks. Like Teflon.

If we make rejection part of our daily routine, we don’t feel its immediate brunt as it becomes more common. That proposal that was rejected by the client? OK – part of the normal routine. Let’s get another one out the door with some tweaks and hopefully it will get approved. That huge RFP that you put out that didn’t turn into a contract? It’s part of the normal ebb and flow of the business. Let’s try again.

When we make rejection a part of our daily routine, we take the stigma out of it and make it expected instead of something to loathe and run away from. And when you do that – then guess what? Rejection isn’t all that bad – we become used to it. And when rejection loses its scary fear, it becomes another thing we endure daily to overcome. Like traffic or bad weather.

3. LEARN ALL YOU CAN

Rejection creates a prime opportunity to learn. Yet so many people are emotionally invested in whatever they get rejected over that they are unable to see the forest for all the trees. And what ends up happening is that we miss a very important opportunity

to learn from the rejection. It is literally one of the world’s best real-life chances to fix something that isn’t working. Yet so many of us don’t even want to talk about what is not working, and we lose an amazing, powerful innovative and creative spark.

BASHAN

Rejection is one of nature’s most perfect ways of telling us that what we are doing is not working, and to change course. There are tons we can learn from that.

Is it a particular offering that isn’t working? Is it the market we have selected? Is it the approach or the strategy that isn’t working and led to this rejection? By not asking these questions and many more, we rob ourselves of potential creativity and innovation that can make us better in every way – both as a company, as individuals and as an industry. So many times we blow right past these chances to become something greater after rejections. Let’s not let another day pass. Next time we are faced with rejection, lets learn all we can from it and embrace the learning potential.

Rejection in its forms is a tough thing to deal with. Both at work and personally. And while most people spend their lives running away from it, we instead need to face it head on. There is no real creativity and innovation created when we spend our time running away from the fire of difficulties, for it is in these difficulties that the embers of creativity are born. The material is out there for you to fulfill your God given greatness in your industry, but you have to pay attention to the signposts along the way to succeed.

Nir Bashan is an all-time Top 100 nonfiction book author and speaker. He helps folks become more creative at work.

NIR

How Secondary Trading Platforms Build Stronger Communities

A FUNDING MECHANISM FOR NONPROFITS TO BUILD MORE HOUSING

By MARK TRIBUNA, SPECIAL TO MORTGAGE BANKER MAGAZINE

Most are aware there’s been a significant shift in the housing market, as higher interest rates and high housing prices have prompted many potential first-time buyers, move-up buyers and downsizers to put their plans on hold. But today’s market is especially tough on low- to moderateincome consumers, many of whom have been saving money for years only to be sidelined by a global pandemic followed by soaring interest rates.

There are, of course, some bright spots. One of them has been the impact of new online platforms for exchanging mortgage notes, which are opening opportunities for banks, lenders, and even non-profits to generate liquidity so they can sell more loans. More importantly, perhaps, is that these platforms are helping to build stronger communities, despite inflation and increasing signs of a recession.

THE HABITAT CONNECTION

It isn’t easy being a non-profit organization these days. In fact, according to a December 2021 survey by the Federal Reserve Bank of St. Louis, the COVID pandemic hit the nonprofit sector particularly hard, especially entities dedicated to providing affordable housing.

The pandemic impacted non-profits in two ways, according to the survey. First, it increased demand for food, shelter and other needs among Americans who were laid off or experienced healthcare emergencies during the shutdown. Second, social distancing mandates disrupted the ability of non-profits to raise money through events like dinners, auctions and poker tournaments. While the

pandemic’s impact is fading and many of these events can now be held, 61% of non-profits are still experiencing disruptions that impact their ability to provide services, the survey found.

These challenges aren’t lost on Habitat for Humanity, the world’s largest not-for-profit home builder, or for the 1,200 Habitat for Humanity Affiliates around the world. What many people may not realize, however, is that each Habitat Affiliate is operated independently. They each have an agreement with Habitat for Humanity to use the nonprofit’s branding and other elements of their homebuilding program, but it is up to each Affiliate to determine how to raise money to build homes.

The standard model that Habitat Affiliates use for raising money involves donations and construction sponsorships from banks and other financial institutions. When COVID hit, a lot of that fundraising work disappeared, to the point that many Affiliates struggled to stay afloat. Recently, however, new loan trading platforms have opened up opportunities for Habitat Affiliates — and other nonprofits that operate affordable housing programs — to raise money.

ENABLING CRA LOANS

One of them is the CRA Note Exchange, which was launched in 2018 by CBC Mortgage Agency (CBCMA), a nationally chartered housing finance agency and a leading source of down payment assistance for first-time homebuyers. The CRA Note Exchange enables the sale of Community Reinvestment Act-eligible loans through an online portal to free up capital for additional

affordable home construction. As a secondary market platform, the CRA Note Exchange makes it possible for Habitat Affiliates and other Community Housing Development Organizations (CHDOs) to generate liquidity by selling their affordable mortgages to the highest bidding bank or investor.

Under the process, an affiliate uploads loans to the exchange’s online platform, where underwriters review them to make sure the loans are salable on the secondary market. The CRA Note Exchange then offers them to interested banks and investors who competitively bid on the loans. After an investor’s bid is accepted, CBC Mortgage Agency acts as a conduit facilitating the sale of the loans to the investor. Upon the successful sale of loans to an investor CBC Mortgage Agency will receive a small fee from the sale proceeds.

Based on my experience working with Habitat for Humanity, some Habitat Affiliates have relationships with local banks and can sell loans without the need for a third-party trading platform. However, many affiliates are relatively small and located in rural areas and don’t have those banking relationships. These smaller affiliates also don’t have the staff, resources or expertise to sell loans on the secondary market. They could use assistance creating sales opportunities, navigating sales and getting their loan documents in order.

This is where the CRA Note Exchange is filling in the gap. The beauty about using a third-party loan trading platform is that Habitat Affiliates and other CHDOs can access help getting their loan documents in order as well as guidance through the sales

MARK TRIBUNA

FANNIE MAE AND FREDDIE MAC HAVE OPERATED TREMENDOUSLY IN DIFFICULT MARKETS IN THE PAST AND WILL CONTINUE TO DO SO IN THE FUTURE.

process. These platforms are already making a real difference, too.

For instance, earlier this year, Habitat for Humanity of St. Augustine/St. Johns County in Florida sold its first-ever loans through CRA Note Exchange. In fact, the 14 loans it sold allowed the Florida affiliate to double its home-building production. Another Habitat Affiliate, Habitat for Humanity Georgetown in South Carolina, also recently sold five loans through the exchange in a process that took only a few weeks.

EARNING CRA CREDITS

The CRA Note Exchange was not originally intended to help non-profits raise money for affordable housing but rather was designed as a mechanism to help support the liquidity requirements for funding down payment assistance loans. The purpose was to create a platform where banks and other lenders could go to purchase investment-quality second mortgages. These second mortgages are made to LMI (low-moderate income) borrowers and allow banks to meet their obligations under the federal Community Reinvestment Act (CRA).

The CRA was enacted in 1977 to address lending discrimination in low- and moderate-income communities by requiring all FDIC-insured banks to meet the financial needs of people in the areas in which they do business. By enabling the sale of CRAeligible loans through an online portal,

the CRA Note Exchange allows banks and investors to review, select, and buy loans in areas that support their lending goals and earn CRA credits to show that they are fulfilling their federal obligations.

The exchange also helps CBC Mortgage Agency increase the number of first-time homebuyers using the Chenoa Fund, the national down payment assistance (DPA) program provided through CBC Mortgage Agency. The company provides DPA as second liens, typically coupled with government-backed or conventional first mortgages.

The CRA Note Exchange had some early successes, but when the COVID pandemic hit, many banks and private investors that would ordinarily be motivated to buy loans shut down these operations for about two years. As the economy has healed, banks and private investors are starting to again buy these loans. To date, more than $16.4 million in first and second CRA eligible loans have been purchased by financial institutions through the exchange.

WHEN SELLING ISN’T ENOUGH

A few years ago, CBC Mortgage Agency began to hear from non-profits operating affordable home building programs that need to sell their loans to increase liquidity. After joining CBC Mortgage Agency as a senior advisor to the CRA Note Exchange in 2018, we modified the CRA Note

Exchange to add a loan program that would accommodate Habitat Affiliates and other nonprofit entities and housing agencies.

It should be mentioned that simply providing a way for banks and non-profits to sell affordable home loans is not enough. It’s important for any loan trading platform to be discerning about who is purchasing the loans and to be serious about helping borrowers and servicing the loans in a compliant manner.

For example, if a borrower is having trouble making payments, the bank shouldn’t be quick to move the loans to default or foreclosure status. Borrowers should be provided every chance of repaying the loans so they can keep their homes. At CRA Note Exchange, there’s a special servicing arrangement in place to make sure borrowers are able to stay on track with their payments, and if they miss a payment, banks are encouraged to work with them to bring their loans back into performance.

Now that the CRA Note Exchange can trade first and second mortgages, it can serve many more banks and nonprofits. Today, we are seeing a lot more activity on the CRA Note Exchange and expect to sell more loan pools for Habitat Affiliates next year. Part of what makes these partnerships work is that CBC Mortgage Agency shares Habitat for Humanity’s mission of helping families afford a home of their own.

Everyone involved in affordable housing programs wants to help more people buy homes. Yet too many Americans are missing out on this opportunity because there is a general lack of funding mechanisms for entities in a position to build or finance homes to generate the liquidity they need. This, in turn, is negatively impacting our nation’s low- and moderate-income neighborhoods.

Ultimately, loan trading platforms like CRA Note Exchange are helping to build stronger communities by increasing homeownership. As the housing economy continues to evolve, these platforms offer proof that when there is a will to expand homeownership, there is always a way.

Mark Tribuna is the senior advisor for CRA Note Exchange offered by CBC Mortgage Agency, a national provider of down payment assistance for low- and moderateincome homebuyers. He can be reached at mark.tribuna@cranoteexchange.com.

‘TOO MANY AMERICANS ARE MISSING OUT ON THIS OPPORTUNITY BECAUSE THERE IS A GENERAL LACK OF FUNDING MECHANISMS FOR ENTITIES IN A POSITION TO BUILD OR FINANCE HOMES TO GENERATE THE LIQUIDITY THEY NEED.’

Veterans, when you’re struggling, soon becomes later becomes someday becomes ...when?

Don’t wait. Reach out

Whatever you’re going through, you don’t have to do it alone. Find resources at VA.GOV / REACH

PROFIT. AT THE PUSH OF A BUTTON.

Transform Your Tech Strategy, And Outpace Your Competition

The turbulent mortgage market is creating an opportunity to upgrade how we originate mortgages. The answers all revolve around technology and enhancing the origination experience. New tech will lower personnel costs, speed loan delivery, capture application data faster with greater accuracy, and allow more effective marketing including post-close communications.

That’s why you need to be part of the incredible OriginatorTech Live conference. Built off of more than three years of impressive online events, OriginatorTech Live now gives the power players in the field a chance to come together, understand the forces changing the marketing, sales, and delivery channels, and see in-depth hands-on demonstrations of the most compelling products on the market today. You will also hear case studies from origination experience lenders sharing the impact of tech on their organizations.

Mortgage banking executives, broker-owners, top producers, CIOs, and more will walk away from this gathering with more tools, more insight, and more ability to outpace the competition.

We’re at the fun and exciting Linq Hotel and Casino in the heart of the Las Vegas Strip. Join us March 22-23 for the one conference sure to show you a path to the ultimate origination experience.

March 22-23, 2023

The Linq Hotel + Experience, Las Vegas originatortech.live Register for FREE with promo code MBMFREE

Keys To Measuring ROI On Tech Spending

LENDERS NEED TO ASSESS FINANCIAL AND NON-FINANCIAL ASPECTS OF TECHNOLOGY SUCCESS

Especially in today’s market environment, the return on investment on mortgage technology investments is one of the most important metrics lenders can measure — but more than the financial returns need to be taken into account, according to Stratmor Group. In the just-released January issue of Stratmor Group’s Insights Report, Senior Advisor Sue Woodard analyzes how mortgage lenders can assess their technology ROI more accurately.

Woodard’s article, “Unlocking the ROI of Mortgage Technology,” compares the experiences lenders have with technology to how consumers use Peloton®’s popular line of interactive exercise equipment. In both cases, the best results are achieved when users commit to change and adoption.

“We buy the equipment with the image in our head of the outcomes — healthier heart, stronger muscles, weight loss, increased stamina — one or all those things are the

ROI that we expect for investing in fitness technology,” Woodard writes. “But the only way we’ll see those meaningful changes is with a partnership between the technology and services being provided (in this case, by Peloton) and ourselves the riders, via changes in our own habits, routines and disciplines.”

This is exactly how mortgage lenders should be thinking about the returns they hope to gain from the technology they have recently invested in and new tools in the future, Woodward says.

According to her article, there are typically four categories of benefit that contribute to overall ROI: profitability, productivity, people and risk prevention. Lenders would like to see a return in all these areas, but when they don’t get it, they often blame their technology partners. “Here is

an uncomfortable truth: the lender and the vendor both share responsibility for making technology deliver,” Woodard says.

However, measuring the financial and non-financial aspects of technology success can be a challenge. The process requires the lender to look beyond spreadsheets to the front lines and ask employees about the returns they are enjoying from technology investments. Adoption and change management are the keys to increased ROI, and while the vendor can certainly help here, this responsibility falls primarily to the lender. Woodard provides tactics lenders can use to improve ROI, but ultimately, lenders must commit to creating this change.

“Written another way,” says Woodard, “don’t just buy the Peloton. Be the kind of person who is committed to their health and fitness.”

‘HERE IS AN UNCOMFORTABLE TRUTH: THE LENDER AND THE VENDOR BOTH SHARE RESPONSIBILITY FOR MAKING TECHNOLOGY DELIVER.’

AT FIRST SOME MIGHT THINK, ‘I’LL JUST TREAT MY CLIENTS AND COWORKERS LIKE THEY’RE WHITE PEOPLE,’ BUT THAT COULD BE A MISTAKE. IT’S NOT ABOUT TREATING ALL GROUPS THE SAME. IT’S ABOUT RECOGNIZING DIFFERENCES AND UNDERSTANDING PEOPLE’S CULTURES — THAT IS HOW TO HONE IN ON MARKETING TO EACH GROUP.

Malia Lazu, CEO and founder of Lazu Group.

Studies show even small mortgage firms’ bottom lines benefit from D&I

By KATIE JENSEN, STAFF WRITER, MORTGAGE BANKER MAGAZINE

Let’s face it, not everyone cares about promoting diversity and inclusion.

D&I experts who speak at conferences already know this — some audience members remain engaged, while others consider it to be an intermission period, getting up to go to the bathroom or refill their coffee mugs.

But the people leaving the room need to know this one statistic from a McKinsey study of 1000 companies in 50 countries: diverse companies outperformed those that are less diverse by 36% in profitability.

It’s their secret weapon. You don’t care about increasing diversity? OK, well how about money? If there was a widget that could increase your company’s profits by 36%, you would buy it, wouldn’t you? The idea is you could do the same thing at no additional cost by making your potential hiring pool more diverse.

Even in smaller teams of four to five people, having a diverse member can give you an edge over other competitors. Having a female or ethnic minority on your team — especially someone who speaks a foreign language — can help you reach untapped markets.

Of course, it’s not as easy as installing a

widget. These are people who want to be heard in company meetings, feel connected with team members, and get invited to the next lunch outing. They want to feel respected and included, which is where things get difficult.

The McKinsey study that everybody quotes also reveals that a company’s approach to inclusion determines if a company gets those profits. Otherwise the needed diverse talent is lost.

Sentiment towards inclusivity is much more negative than sentiment towarddiversity. Overall sentiment on diversity was 52% positive and 31% negative, but sentiment on inclusion was

markedly worse, at only 29% positive and 61% negative.

“This encapsulates the challenge that even the more diverse companies still face in tackling inclusion,” the study states. “Hiring diverse talent isn’t enough — it’s the workplace experience that shapes whether people remain and thrive.”

Before getting into talent retention, though, here’s how diversity can increase profits - even at small mortgage companies.

SALES PSYCHOLOGY 101

DIVERSITY AND INCLUSIVITY FATTENS YOUR PROFITS 36%

An interesting fact came out of a study from the Federal Reserve Bank of Dallas in 2022, which showed minority students tend to achieve better outcomes when taught by minority teachers and minority patients achieve better outcomes when treated by minority doctors — in both professions minorities are underrepresented. Following the same trend, minority applications handled by minority loan officers are more likely to be completed, approved, and result in loan originations than those handled by white loan officers. They are also less likely to default on their loans.

Loan applications from minority borrowers are about 5 percentage points less likely to result in an origination than applications from white borrowers handled

> Diverse companies outperformed those that are less diverse by 36% in profitability.

by the same white loan officer, but this difference is 2-4 percentage points smaller for minority officers, the study states.

Researchers first assumed that white loan officers had stricter standards for their minority clients, but that wouldn’t explain why minority loan officers have lower default rates. Instead, researchers believe the results indicate minority loan officers have an “informational advantage” in handling loan applications from minority borrowers.

The best possible reason they could provide was that minority loan officers punish their clients less when they have a lower credit score, compared to white loan officers. Still, this doesn’t explain the difference in default rates.

It’s an interesting phenomenon, but it can be more easily understood when considering the context of the situation. Minority populations, particularly the Black community, have developed generational distrust of financial institutions. The mortgage industry has a long history of redlining and discriminatory policies. Although the Community Reinvestment Act has outlawed many of these practices, the effects are long lasting.

“The banking, finance, and mortgage industries have a dark history,” said Malia Lazu, CEO and founder of the Lazu Group and former executive vice president and chief experience and culture officer at Berkshire Bank in Boston. “And it’s hard for some people nowadays to admit because it’s

changed in a lot of ways, but the effects of it have laid over for generations.”

Lazu explains how even more recent events have contributed to this distrust, such as the 2008 subprime loan crisis. In 2006, the rate of subprime mortgages for home purchase for Hispanics and Black Americans was approximately double the white rate, according to the Joint Center for Political and Economic Studies. Twenty-six percent of mortgages for home purchase by whites were subprime. For Hispanics, it was 47% and for Black Americans it was 53%.

SUBPRIME WOES

These weren’t low-income borrowers either. These predatory loans stripped the wealth of high-income Black and Hispanic Americans. In 2006, at the height of the boom, Black and Hispanic families making more than $200,000 a year were more likely on average to be given a subprime loan than a white family making less than $30,000 a year, according to researcher Jacob Faber when he presented at the annual meeting of the American Sociological Association.

“It’s that posturing that still exists in financial services,” Lazu said. “I think what’s very important for lenders to realize is that the way they look at these communities is one of extraction.”

Social Psychologist Roderick M. Kramer, who has authored articles in Harvard

Business Review, said we’re far more likely to trust people who are similar to us in some dimension. His hypothesis is backed by other researchers, such as Lisa DeBruine, who conducted a test in which she created an image of another person that could be morphed to look more and more (or less and less) like a study participant’s face. The greater the similarity, DeBruine found, the more the participant trusted the person in the image.

Although it’s very possible and highly encouraged for white loan officers to work with people outside their own community, the data shows that the results are much better for minority loan officers.

The banking, finance, and mortgage industries have a dark history. And it’s hard for some people nowadays to admit because it’s changed in a lot of ways, but the effects of it have laid over for generations.

MALIA LAZU, THE LAZU GROUP

Understanding and being able to build relationships with people of a different skin color or culture is not just a nice thing to do — it’s essential for a successful career.

UNDERSTAND THE DIFFERENCES

Most people in the mortgage industry are loan officers and brokers, or in other words, salespeople. Social skills are mandatory in this field, and one of the valuable skills to have is connecting with people regardless of their skin color or background.

“D&I makes good business sense because it allows you to be able to ensure you are accessing and connecting with all parts and all segments of the market, thus resulting in a larger market share. You’ll get more market share and more profitability because you’re reaching untapped markets than your competitors are,” Tony Thompson, founder and CEO of National Association of Minority Mortgage Bankers of America (NAMMBA), said.

At first some might think, ‘I’ll just treat my clients and coworkers like they’re white people,’ but that could be a mistake. It’s not about treating all groups the same. It’s about

recognizing differences and understanding people’s cultures — that is how to hone in on marketing to each group.

Consider this quote from Tom Burrell, one of the Black pioneers in Chicago advertising in 1961. “I had to convince clients to understand that Black people are not dark-skinned white people,” Burrell said. “Sometimes when you start talking to people about race and differences, implied in that is some kind of subordination, so I had to convince them that you can be different and equal, and that there are cultural differences that should be part of advertising aimed at a black cultural group, such as music.”

Brian “Woody” White, senior vice president and chief diversity & inclusion officer at Homebridge Financial Services Inc., has been a mortgage executive for the past 30 years, and was oftentimes the only Black executive in the company. He has tried to teach his colleagues why it’s important to recognize the differences between various demographic groups, and how it can help them become better salespeople.

LEARNING ABOUT DIFFERENT CULTURES

Iremember sitting in front of a local bank and their goal was to educate the community on their products and how to save money,”’ White said. “We’re in this community, and the bank is saying ‘You can put your money in a CD’ (certificate of deposit). They talked about these things, but didn’t understand the community. These are people who need their money to be liquid, they need access to it. You wouldn’t be telling them to put their money in a threeyear CD. It doesn’t make any sense. So people walked away saying, ‘This didn’t help me at all.’

More diversity increases profitability because you can reach untapped markets — markets less-inclusive competitors are ignoring. You can learn more about these specific communities by opening up your circle.

Thompson believes that while some companies embrace diversity, they need to answer this question: Do we have the right culture in place that supports long-term retention in our organization to allow us to truly be successful?

Keep in mind this does not only pertain to large companies and organizations. Even departments and small teams have a work

cultural issues. The Lazu Group provides new skill sets, models and networks necessary to create lasting cultural change resulting in more profitable businesses, better retention rates, more effective recruitment, and successful engagement with both existing and new consumer groups.

REAL-LIFE EXAMPLES

Lazu offers plenty of real life examples of how company culture and social dynamics get tricky once more diverse talents come through the door.

The 3 L’s

> LISTEN: Seek out conversations about race, history and the experiences of people of color.

> LEARN: Commit to learning about the history of institutional and systemic bias with the community and understand their solutions.

> LOVE: Take loving, informed action centering repair and equity.

“That’s all a result of no diversity in planning the products,” White continued. “Nobody in the meeting understood the community and people walked out dissatisfied.”

BUILDING MORE INCLUSIVITY

What’s the best way to learn about different cultures? Start with the people working in your own office. It’s possible there may not be many ethnic minorities, women, or LGBTQ+ colleagues, but if there are, befriend them, ask questions, and honestly try to get to know them. This is why inclusivity matters. If you need to go out of your way to meet people from different cultural backgrounds, then you’re living and working in a bubble and that’s dangerous for someone in the mortgage industry.

Listen to your colleagues, employees, friends, or neighbors who are currently living in that world. If companies understand the value of listening, then they can understand the value of inclusion.

culture that may or may not be inclusive. Ensure that your culture, whatever it may be, is inclusive to everyone. Don’t let talented players walk out your door because they feel like they don’t fit in.

As Thomspons says, office and work culture is a major determining factor on whether diverse talents choose to stay in a company or not. Even Thompson himself, a personable and extroverted man, had trouble fitting in at some of the companies he worked for because he’s Black, which is why NAMMBA was founded.

“At the end of the day, NAMMBA was started because I didn’t feel included,” Thompson said. “The initial genesis of the founding of NAMMBA was just to provide an environment where people could come in and connect and engage and build relationships. And, and we’ve held true to the essence of that spirit, which really makes us different.”

Lazu is the woman CEOs call to fix their

In an all-male company that just recruited females into the workplace, the men begin to resent the fact their jokes have to change. They need to be more sensitive to the female workers. They have to do after-work activities that wouldn’t exclude the women. Even though company culture may not change that much, the resentment is still there.

If your employees or colleagues don’t have a positive attitude about being inclusive, then it becomes the boss’s job to make it work.

“Inclusivity, if it’s not fun, you’re not doing it right,” Lazu said. “That means making friends, right? That means being curious about the new people that are coming in. That means learning about new cultures and having fun things to do.”

Lazu says to leave behind those people dragging their feet, and build an inclusive culture without them. Forcing them to come along will only frustrate and stall progress for the rest of the group that wants to learn.

“I think the way you make it fun is, you know, you have games and actual in-person experiences,” Lazu said. “I think training is counterintuitive to building inclusion. Who wants to be trained on how to be nice to someone, right? So, I think you want to move from training to more of an educational experience, peer-to-peer learning.”

Anyone can implement Lazu’s advice and methodology into their workplace to promote more inclusivity. One methodology in particular is to keep the three L’s in mind: Listen, Learn and Love.

Five Predictions Home Equity Lenders Should Be Tracking

DESPITE INTEREST RATE INSTABILITY, HOMEOWNERS WITH CASH ON HAND STILL LIKE BORROWING

By OMAR JORDAN, SPECIAL TO MORTGAGE BANKER MAGAZINE

At the beginning of 2022, interest rates were near zero, major stock indexes were hitting record highs, and home prices seemed to be rising inexorably. After a bruising year of soaring inflation, shrinking 401(k)s, and a cooling real estate market, many homeowners, buyers, and lenders didn’t anticipate just how severe the economic contraction would be in 2022.

For 2023, there are several trends in the real estate sector lenders should be following closely. From the persistence of high interest rates to declining demand and prices, the real estate market is shifting away from stratospheric valuations and record-setting mortgage origination volume. However, tappable home equity will remain strong as homeowners continue to rely on it over other forms of borrowing. Meanwhile, fintech companies will continue dedicating significant resources to home equity lending.

While lenders face a difficult economic environment in 2023, they will continue to provide stability for borrowers at a critical time. As inflation finally starts to ease and consumers contend with the effects of the Fed’s rate increases and a likely rise in unemployment, home equity will continue to be a vital source of financial security. Let’s take a closer look at the trends lenders should be focused on to navigate the next year and effectively serve their customers.

1 Homeowners will continue to prioritize home equity loans and HELOCs.

Despite surging interest rates, homeowners with cash on hand still prefer to borrow money instead of depleting their savings. This is especially true at a time when the personal savings rate has collapsed to its lowest level since the summer of 2005, while credit card debt has spiked by 15 percent – the largest year-over-year increase in more than two decades. Tax deductions are also available on home equity interest for homeowners who use their loans to buy, build, or substantially improve their homes.

These are just a few of the reasons homeowners will increasingly draw upon their lendable equity to consolidate unsecured debt and avoid high interest rates.

2 Tappable home equity will remain strong despite the economic slowdown.

After months of rocketing inflation, prices are finally getting under control. The inflation rate fell from a multi-decade high of 9.1% year-over-year in June to 7.1% in November, and this trend is likely to continue into 2023. However, there will likely be reduced consumer demand this year, and the housing market is no exception. Although this will lead to a decline in real estate valuations and a buyer’s market, lenders should remember that the average American homeowner

OMAR JORDAN

still has almost $217,000 in tappable home equity. The equity market is likely to show resilience in 2023, which will be a boon to banks and credit unions. While a jump in unemployment and a corresponding rise in delinquency rates could lead to tighter underwriting guidelines, this doesn’t appear to be inevitable.

3It will be a long time before the Fed interest rate nears zero again.

It’s unlikely that we’ll see more huge rate increases in 2023, but the current rate is at its highest level in 15 years and the Fed projects that it will raise rates over 5 percent by the end of the year. As inflation falls, rates will gradually begin to come down in mid-to-late 2024. While the Fed may be forced to drop rates more rapidly if unemployment accelerates too quickly, lenders should expect a steady downward adjustment in late 2024 and 2025. Regardless of the Fed’s pace, we aren’t going to see extremely low interest rates for quite awhile.

4Refi and purchase mortgage volume will be sharply lower.

Transunion anticipates that mortgage purchase originations will be just over 4 million in 2023, which would be a significant decline from 7.4 million in 2020 and 8 million

in 2021. Meanwhile, refinance originations are projected to fall to 1 million – a historic low. Since May 2022, the median number of days on the market for homes has almost doubled from 31 to 56, which indicates that homebuyers are being more cautious. As interest rates continue to rise and the overall economic situation remains precarious, lenders should expect refi and purchase mortgage volume to remain suppressed.

5

Fintech investors are piling into home equity lending.

As homebuyers reassess their options for financing and lenders attempt to make the origination process more userfriendly, fintech investors are rushing to enter what they regard as a market primed for disruption. As consumers demand online loan solutions and digital home equity applications increase dramatically, fintech companies are well-positioned to help lenders keep pace with these changes.

A 2021 survey of bank and credit union executives found that 81 percent regard fintech partnerships as important – an increase from 49 percent in 2019. As consumer expectations continue to shift toward digital lending and loan management, fintech partnerships will be more and

more critical for home equity lenders.

With the economy reeling from persistent inflationary pressure, consumers taking on higher levels of debt and cutting into their savings, and job losses likely in the immediate future, it’s no wonder that the real estate market has been suffering. After years of low interest rates and swelling valuations, a correction is underway.

But lenders should remember that homeowners will continue to use their reserves of tappable home equity and avoid financially crippling alternatives like credit card debt as they navigate a difficult economy in 2023. Lenders should also expect a period of significant innovation in the sector as fintech companies develop ways to make home equity more accessible and banking services more user-friendly. While there are major obstacles ahead, 2023 will give lenders an opportunity to distinguish themselves in an increasingly dynamic industry.

Omar Jordan is founder and CEO of Coviance, which is making the home equity lending process simpler, faster, and more scalable through its cloud-based platform.

Discover Where Your Competitors Stand In The Mortgage Market

Adapting to today’s dynamic mortgage market has changed the way we analyze trends and track competitors. Luckily, we have the tools you need to determine your competitors’ market share and see how individual loan originators are performing in their market.

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GET A FREE MORTGAGE COMPETITOR ANALYSIS

To show you just how powerful our modules are, we’re offering a free customized mortgage competitor analysis. Simply visit www.thewarrengroup.com/competitor-analysis and provide us with a few details. You’ll receive an updated 2021 vs. 2022 Quarterly Mortgage MarketShare Report at the company level paired with a Loan Originator Report highlighting top LOs and individual performance.

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When The Award Goes To

Someone Else

RESEARCH SHOWS HOW NON-WINNERS REACT AND WORK WITH OTHERS GOING FORWARD

e are all familiar with the televised award shows. After the winners are announced the cameras pan to the losers - most of whom put on a game face.

The nominees who are left emptyhanded on awards night face the emotional letdown of almost winning. It’s the sting felt by anyone who almost had the win – think France’s World Cup team, any Olympic silver medalist, and the countless stellar employees nominated for their organization’s awards program who didn’t get the prize. Those almost-winners are very valuable to organizations and, with the right encouragement, can continue to contribute and collaborate to become winners next time, says Hui Liao, Smith Dean’s Professor in Leadership and Management at the University of Maryland’s Robert H. Smith School of Business.

WIn new research in the Academy of Management Journal, Liao and her coauthors, including Smith PhD candidate Olivia Zhishuang Guan, look at how the experience of almost winning impacts the performance of nominees, specifically their collaboration with others.

Right after the awards are announced, nominees who didn’t win lost motivation to respond to and collaborate with the winners, the researchers find. This was especially true when the non-winning nominees worked in the same department or in other proximity to the winners. However, in the long run, the nonwinning nominees collaborated with other employees better. They got over the loss, picked up, and became even more responsive collaborators than they were before the awards were announced, says Liao.

She says previous research has looked at the effectiveness of company-wide

employee awards programs, which are very prevalent and often include a monetary reward and public recognition.

A DIFFERENT EXPERIENCE

Companies set up these programs not only to recognize those who have done well, but also to reinforce the organization’s culture, goals and critical behaviors of all employees,” Liao says. “They want the award-winners to be role models for the rest of the organization.”

This is the first research to look specifically at the non-winner nominees as a separate group from others who didn’t receive the award. Having almost won, they have a much different psychological experience than other non-recipients, says Liao. “Lumping them together could prevent us from really understanding how these two groups of people will react to employee awards differently.”

And though nominees might be a

small number of employees, they are very important to an organization.

“Being nominated itself is an indicator of a high level of capability, skill, and performance relative to those who did not get nominated in the first place,” Liao says. “That’s why understanding how an awards program is motivating – or demotivating – for non-winners nominees is very important.”

Liao and her co-authors specifically looked at employees’ collaboration responsiveness, or how promptly or not an individual responds to a request for information or a meeting from colleagues. Collaboration in teams, across units and even with other organizations is considered a critical component for success for many businesses.

The researchers analyzed data from an online collaboration tool from a large organization in the two months before a big company-wide award was announced and in the six months after. They focused on the

collaborative responsiveness of non-winner nominees to other people in general, and to winners.

NO INTEREST IN PARTNERSHIPS

“We found that compared to non-nominees, the non-winner nominees have lower collaboration responsiveness to winners following the awards announcement,” Liao says. “When they have a higher structural proximity to the winners – for example, they were on the same team or worked in the same office – then the negative impact on their responsiveness was even bigger.”

However, in the long run, the researchers found that non-winner nominees have higher collaboration responsiveness to others in general.

To figure out why, Liao and her co-authors surveyed the employees immediately after the awards announcement to capture their emotions and motivations.

no overall impact to non-winner nominees’ overall collaboration responsiveness to others in general, says Liao.

But six months later, the positive effects prevail, she says, because negative emotions subside and people realize that if they didn’t win this time, they have potential to win next time..

“The non-winner got over it and became more rational,” Liao says. “That’s why we found in the long run, losing increased nominees’ collaboration responsiveness.”

She says there are things managers can do to encourage the best outcomes.

NEAR-WINNER ADVICE

“It is very important for managers to be mindful in promoting collaboration between non-winner nominees and the winners because that’s where the tension is the strongest, especially immediately following the award program. They should recognize that this shock to the non-winner nominees

Like many near-winners, the nominees who missed out on awards felt frustration, disappointment, anger and resentment –all the emotions that go along with the “itcould-have-been-me” thinking.

“This is why immediately following the award announcement, we see the non-winner nominees decrease their collaboration responsiveness to the winners,” Liao says.

A GREAT MOTIVATOR

But, she says, the research also shows how losing can also be a great motivator for nonwinner nominees. “We found from Study 2 that right after the announcement, they experienced simultaneously higher negative emotions and higher motivation. “On one hand they feel frustrated, angry and disappointed that they didn’t win, but on the other hand, that becomes motivation to do better to win next time.”

In general, because the negative emotional impact is canceled out by the positive motivation impact, in the short run, there is

will generate strong negative emotions and that could impact their collaboration with others, especially the winners.

“Managers can help non-winner nominees curb such negative emotions through showing appreciation for their contribution and providing support such as encouragement, feedback, and resources to help them pursue higher performance and better chances of winning in the future.”

For the near-winning employees, Liao has this advice: “Though you may feel terrible right after losing out to others, you will get over those feelings. Believe in yourself and believe that good efforts will prevail. Have your eyes on the prize, keep trying and you may have a good shot at it.”

And the advice goes beyond award programs, she says.

“This can be applied to not only the situation where you got nominated but didn’t win the award, but to any situation where you really consider yourself very, very close to ‘getting it,’ but lost out.”

“We found that compared to non-nominees, the non-winner nominees have lower collaboration responsiveness to winners following the awards announcement...”

–Hui Liao

Ncontracts Announces Launch Of Risk Performance Management

Ncontracts, a provider of integrated compliance and risk management solutions to the financial industry, is helping to define a new category and view of risk management with the release of its Risk Performance Management (RPM) Suite.

The RPM Suite combines four of Ncontracts’ industry-leading solutions for financial institutions – Nrisk, Ncomply, Nvendor and Nfindings – into one powerhouse suite that expands on the enterprise risk management (ERM) framework by leaning into improvements in efficiency and speed to improve resiliency, responsiveness and growth.

Ncontracts’ latest RPM Suite provides superior ERM solutions designed to help clients navigate uncertainty by transforming data points into timely, actionable insights that inform strategic decision making. Leveraging knowledge as a service (KaaS), these customizable solutions combine software with business intelligence and services to ease the burden of risk and compliance management with comprehensive data for quicker decision-making, greater efficiency, and the foundation for the risk management culture examiners expect.

BMO Offering E-Closing For Refis

BMO Financial Group announced that it now offers fully digital residential mortgage refinancing for loans secured by property in U.S. states and counties that accept recording of e-signatures and digital notaries.

The bank said this will simplify and expedite the homebuying process for customers in those locations.

BMO said it will leverage digital mortgage technology provider Blend’s mortgage eNotes capabilities and its Close product to allow customers to complete their mortgage refinancing from anywhere, at any time, online.

BMO said it is the first bank to offer electronic close on mortgage refinancing in the U.S. with Federal Home Loan Bank of Chicago, which involves signing mortgage documents digitally. Many e-closings still require at least one face-toface meeting, the company said. BMO customers in certain jurisdictions, however, can review and sign documents to finalize a loan all online.

Revolution Mortgage Partners With Silverwork Solutions To Provide Software Robots Suite

Silverwork Solutions, a developer of digital workforce BOTs to significantly reduce production costs for lenders nationwide, announced a partnership with Revolution Mortgage. The Silverwork suite of software robots will be used across production operations at Revolution Mortgage to enable a low-cost and best-in-class loan manufacturing process.

Silverwork’s Digital Workforce Solution combines deep industry knowledge and cutting-edge automation to reduce operating costs. This delivers operational cost reductions through the execution of advanced intelligent automation and machine learning.

The BOTs take on human mortgage personas that are intuitive and immediately fit in with current staff, reducing the time to deploy. The Digital Workforce BOTs can quickly be trained and deployed adding digital labor to the mix enabling new ways to adjust and balance human capital and provide a new level of efficiency. With these advanced BOTs, lenders are seeing improvements in labor reduction, loan quality, compliance, tolerance cures, and processing speed.

UWM Enhances Its Safe Check Program

United Wholesale Mortgage (UWM) has enhanced its Safe Check program in another effort to streamline the loan approval process.

Safe Check, launched in October 2022, provides loan officers more certainty and confidence to pull valid pricing, UWM said.

With the enhancement, Safe Check now allows lending officers to run a single or tri-merge soft credit check to pre-qualify borrowers. The new tri-merge option, available for a flat rate of $23, provides the FICO score accuracy of a hard credit report, while protecting both the lending officer and the borrower from credit trigger lead solicitations, UWM said.

Lending officers can also combine Safe Check with UWM’s BOLT underwriting technology, allowing them to obtain an initial approval in minutes and gather documents before ordering a full credit report for when the loan is ready to be submitted to underwriting, the company said.

UWM also recently announced a credit solution that allows independent mortgage brokers to order hard credit reports for UWM loans for a flat fee of $37.35, combating the recent significant increases in the cost of running credit reports.

Total Expert Powers 36% Of Total Mortgage Loans

Total Expert, the only CRM and customer engagement platform purpose-built for modern financial institutions, recapped a year marked by customer resilience during the most turbulent market in recent years. This announcement marks strong growth for Total Expert as the company debuted its Customer Intelligence solution, innovative platform integrations, and key executive leadership appointments.

In 2022, the company’s platform powered more than 2.1 million mortgage loans, representing 36% of total U.S. home loan volume, and continued to demonstrate its role in supporting banks, mortgage lenders, and credit unions.

In 2022, Total Expert introduced its Customer Intelligence solution, providing banks and mortgage lenders the behavior and intent data they need to connect with customers at key moments of opportunity and unlock growth. Helping customers shift beyond traditional marketing tactics, more than 30M customer contacts are being monitored by Customer Intelligence, watching for moments of opportunity, such as when a prospect or customer lists their home or has their credit pulled. These insights enrich Total Expert’s comprehensive profile of every customer and enable lenders to take the right action at the right time based on each customer’s unique financial milestones.

Guaranteed Rate Bolsters Extensive Spanish-Language Mortgage Program

TransPerfect, a provider of language and technology solutions for global business, announced a major contract renewal for Guaranteed Rate. Building off Guaranteed Rate’s September 2022 launch leveraging TransPerfect’s GlobalLink platform, this collaboration will support Guaranteed Rate’s multi-channel communications campaign for Spanish-speaking consumers in the U.S.

Guaranteed Rate specializes in providing easy, transferable, and affordable mortgage loans through a system that aims to simplify home buying. Increasing accessibility through an exceptional Spanish-language process is a top priority for Guaranteed Rate. With Spanishspeaking agents as well as Spanish educational materials, transaction documentation, corporate websites, and customer support services, Guaranteed Rate is one of the first mortgage organizations to provide an end-to-end experience in Spanish.

Guaranteed Rate chose TransPerfect and its GlobalLink technology to support the creation and launch of its customer-facing content, including marketing and supporting materials, with minimal assistance needed from IT and project management teams. The simplicity of the launch and maintenance has resulted in significant cost and time savings for Guaranteed Rate.

Scott L. Luna Partner

sluna@ravdocs.com

469-730-4607

Scott Luna’s practice is focused on real estate law with an emphasis on mortgage document preparation and land title issues. Scott managed a successful multistate highvolume title and document preparation business for over 20 years before joining RAV and is recognized throughout the real estate legal community for his expertise. As a past President of the Oklahoma Land Title Association, Scott’s ongoing involvement in the industry adds to his wealth of title-related knowledge. Scott received his Juris Doctor degree from the University of Tulsa College of Law in 1991 after receiving his Bachelor of Science degree from Texas A&M University. Scott is currently licensed in Texas, Oklahoma, Missouri, Minnesota, Nebraska, and Kentucky.

Mitchel H. Kider Managing Partner

kider@thewbkfirm.com

202-557-3511

Mitch Kider is the Chairman and Managing Partner of Weiner Brodsky Kider PC, a national law firm specializing in the representation of financial institutions, residential homebuilders, and real estate settlement service providers. Mitch represents banks, mortgage companies, homebuilders, credit card issuers, and other financial service companies in a broad range of litigation and regulatory and compliance matters. He defends clients in investigations and enforcement actions before the Consumer Financial Protection Bureau, Department of Housing and Urban Development, Department of Justice, Department of Veterans Affairs, Federal Trade Commission, Fannie Mae, Freddie Mac, Ginnie Mae, and various state and local regulatory authorities and Attorneys General offices. In addition, Mitch acts as outside general counsel to smaller companies and special regulatory and litigation counsel to Fortune 500 companies.

MORTGAGE BANKING LAWYERS

Gregory S. Graham

Co-Managing Partner

ggraham@bmandg.com

972-353-4174

Black, Mann & Graham CoManaging Partner Gregory S. Graham has practiced in the areas of real estate, litigation, and bankruptcy law since 1989, and is currently licensed in Texas and admitted to practice before the United States District Courts for the Northern and Eastern Districts of Texas.

Mr. Graham is also currently licensed to practice law in Georgia and has been since 2017. He received his Juris Doctor degree from Southern Methodist University School of Law in 1989 after receiving a Bachelor of Arts cum laude from UT Dallas.

Mr. Graham’s affiliations include the Dallas MBA, where he previously served as a Director & Chairperson of the Legislative Committee; DFW Mortgage Brokers Association, where he previously served as Legal Counsel; MBA; NAMB; Texas AMB prior to its closure; and Texas MBA.

James W. Brody, Esq. Mortgage Banking Practice Group Chair

jbrody@johnstonthomas.com

415-246-3995

James Brody actively manages all the complex mortgage banking litigation, mitigation, and compliance matters for Johnston Thomas. Mr. Brody’s experience centers on those legal issues that arise during loan originations, loan purchase sales, loan securitizations, foreclosures, bankruptcy, and repurchase & indemnification claims. He received his B.A. in International Relations from Drake University and received his J.D., with a certified concentration in Advocacy, from the University of the Pacific, McGeorge School of Law. He was a recipient of the American Jurisprudence BancroftWhitney Award. He is licensed to practice law in California and has been admitted to practice in front of the United States District Courts for the Central, Eastern, Northern, and Southern Districts of California. In addition, Mr. Brody has served as lead litigation counsel for numerous mortgage banking and commercial related disputes venued in both state and federal courts, in a direct capacity or on a pro hac vice basis, in AZ, CA, FL, MD, MI, MN, MO, OR, NJ, NY, PA, TN, and TX.

marty.green@ mortgagelaw.com 214-691-4488 ext 203

Marty Green leads the Dallas office of Polunsky Beitel Green, one of the country's top residential mortgage law firms. Mr. Green is an accomplished attorney with more than 20 years of experience in the legal, banking and financial services industries. He is the former Executive Vice President and General Counsel for Dallas’ CTX Mortgage Co. and previously worked with the Baker Botts law firm in Dallas as Special Counsel. In his role as leader of the firm’s Dallas office, Mr. Green advises clients on the latest rules and regulations covering residential lending, in addition to building on Polunsky Beitel Green’s long tradition of delivering loan closing documents with speed and accuracy. Mr. Green is admitted to practice before all Texas state and federal district courts in addition to the U.S. Court of Appeals for the Fifth Circuit. An honors graduate of the University of Texas School of Law, he earned his undergraduate degree at Southern Utah University. Texas Monthly has selected him as a Super Lawyer multiple years.

These attorneys are universally recognized by their peers as setting the highest standard for the legal profession, excelling in all fields — knowledge, analytical ability, judgment, communication, and ethics.

Marty Green Attorney

NON-QM LENDER RESOURCE GUIDE

Arc Home LLC Mount Laurel, NJ

Multi-channel mortgage leader with exceptional service and comprehensive mortgage solutions. When it comes to choosing your lending partner, there are many things to consider. Our products set the standard in the industry for innovation. Since that innovation is in our DNA, we will always be on the cutting edge of what matters most to you and your borrowers. At Arc Home, our priority is to provide the best customer experience from registration to closing, and we continue to invest in that philosophy every day.

business.archomellc.com

(844) 851-3600

sales@archomeloans.com

LICENSED IN: AL, AK, AZ, AR, CA, CO, CT, DC, DE, FL, GA, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NY, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY

Carrington Wholesale Dallas, TX

The Carrington Advantage Series is a full suite of Non-QM Loan solutions that “Delivers More” for you and your borrowers. Ideal for borrowers, like the self-employed, that don’t fit Agency or Government Qualified Mortgage standards based on credit quality, property type, documentation type, income documentation, or other borrower situations.

• FICOs 550+

• Primary wage earners FICO

• DTIs up to 50%

• Bank Statements (personal or business) accepted

• We don’t require disputed tradelines to be removed

With the Carrington Investor Advantage (DCR)

• DCR down to .75

• First-time investors are ok

• Only 48 months seasoning for major credit events

• 1x30x12 mortgage history ok

(866) 453-2400 carringtonwholesale.com

LICENSED IN: 47 States (excluding NH, MA & ND.)

WAREHOUSE LENDING RESOURCE GUIDE

FirstFunding, Inc. Dallas, TX

Offers warehouse lines to correspondent lenders, community banks, credit unions, and secondary-market investors.

*Ease of use (Support staff, technology an other tools to support mortgage bankers) FirstFunding’s FlexClose Funding program allows our clients to fund outside the Fed wire restrictions. Same day and afterhours funding. Browser-based proprietary platform, customized reporting tools, and a dedicated customer service team.

Conventional Conforming, Jumbo, FHA, VA, USDA, Non-QM

(214) 8217800

firstfundingusa.com

LICENSED IN: CT, DC, DE, FL, GA, IL, MD, MA, NH, NJ, NY, NC, OH, PA, RI, SC, TN, TX, VA

APPRAISER & AMC RESOURCE GUIDE

PRIVATE LENDER RESOURCE GUIDE

Clear Capital Reno, NV

Clear Capital is a national real estate valuation technology company with a simple purpose: build confidence in real estate decisions to strengthen communities and improve lives. Our commitment to excellence is embodied by nearly 800 team members and has remained steadfast since our first order in 2001.

clearcapital.com

LICENSED IN: AL, AK, AZ, AR, CA, CO, CT, DE, FL, GA, HI, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NY, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY

Alpha Tech Lending West Hempstead, NY

DSCR Rental NO DOC Loans

Alpha Tech Lending is a trusted direct lender, with over a combined 30 years of experience in the private lending sector. We offer a variety of loan programs for non-owneroccupied residences that are customizable to suit your real estate investment needs. From fix and flips, long term rental, new construction, commercial bridge, and more. We lend to both new and experienced real estate professionals throughout the country. We value long term relationships built on trust. Our brokers are protected.

alphatechlending.com

(888) 276-6565

info@alphatechlending.com

LICENSED IN: CT, DC, DE, FL, GA, IL, MD, MA, NH, NJ, NY, NC, OH, PA, RI, SC, TN, TX, VA

Stratton Equities Pine Brook, NJ

Stratton Equities is the leading Nationwide Direct Hard Money & NON-QM Lender that specializes in fast and flexible lending processes. Our Hard Money and Direct Private Money loan programs support the following investment projects:

• Fix and Flip

• Soft Money Loans

• Cash Out — Refinance

• Fixed Commercial Loans

• Commercial Bridge Loans

• Bridge Loans

• Stated Income/ No-Income Verification Loans

• Rental Loans

• Foreclosure Bailout Loan

• NO-DOC

• Blanket Loans

• Fixed Rental Programs

• Multi-Family Loan

No Upfront fees! No Junk Fees! No Tax Returns!

strattonequities.com

(800) 962-6613

info@strattonequities.com

LICENSED IN: All States except for: AK, ND, NV, SD, UT

SPECIAL ADVERTISING SECTION: ORIGINATOR TECH DIRECTORY

COMPANY AREA OF FOCUS WEBSITE

Global DMS Appraisal Management Software globaldms.com

SPECIAL ADVERTISING SECTION: APPRAISER & AMC DIRECTORY

COMPANY AREA OF FOCUS WEBSITE

Clear Capital National real estate valuation technology company clearcapital.com

SPECIAL ADVERTISING SECTION: WAREHOUSE LENDING DIRECTORY

COMPANY AREA OF FOCUS WEBSITE

FirstFunding Inc. Offers warehouse lines to correspondent lenders, community banks, credit unions, and secondary-market investors.

firstfundingusa.com

Independent Bank of Texas Mortgage warehouse lines of credit, from $2 million to $150 million, and fund over 200 delegated and non-delegated retail originators. Ifinancial.com

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